German carmaker to cut costs with new logistics center, remanufactured parts

Published : Aug 3, 2014 - 20:46

Updated : Aug 3, 2014 - 20:46

ANSEONG, Gyeonggi Province ― Mercedes-Benz is seeking to cut prices on parts in an effort to lower the high costs of owning a foreign-brand luxury vehicle here.

In its latest push, the Korean unit in July opened a 52 billion won ($50 million) parts distribution center in Anseong, Gyeonggi Province ― one of the carmaker’s largest investments here in recent years.

“We will elevate our service quality overall by providing the parts more promptly for all our vehicles. In the longer term, we will be able to lower parts prices as well,” said Cho Kyu-sang, vice president of Mercedes-Benz Korea, as he unveiled the new facility to the media last week.

The 17,800-square-meter distribution center is about 2.5 times larger than the previous one, and stores some 31,000 types of parts. An overnight express service for urgent requests will also be adopted.

“We expect customers to receive their parts faster because we have a higher inventory. It used to take six to eight days for a product to be air-mailed after an order was placed to the German headquarters. The reduced service time may lower prices,” Cho said.

Mercedes-Benz Korea had already reduced prices by up to 28 percent on about 6,000 types of parts in January. At the time, the company also lowered the parts prices for its smaller A- and B-class cars by up to 25 percent, and by 4.5 to 10 percent on vehicles introduced more than eight years ago.

An aerial view of the new logistics center. (Mercedes-Benz Korea)

Cho added that while details for another price reduction have not been decided, the carmaker has always been sincere about its pricing policy.

Another price-cutting factor, according to Cho, is remanufactured parts. These parts are original components that have been disassembled, replaced, repaired and reassembled in “every way equivalent to brand new items” by trained workers at the German headquarters. Before, used parts were discarded.

Mercedes-Benz started the distribution of remanufactured parts under the brand “Genuine ReMan” in March and established a special section at the distribution center as well.

With the prices up to 26 percent cheaper than entirely new products, the company is upbeat about the budding business project, while other German carmakers like BMW and Audi have also started similar businesses.

About the quality and performance of ReMan parts, the carmaker ensures that they are equivalent to new ones through a thorough self-certification system.